|  __X___ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) |   |
|--------------|--------------------------------------------------|--------|
|         | OF THE SECURITIES EXCHANGE ACT OF 1934           |   |
|         |                                             |   |

| _____  |   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF |   |
|--------|-------------------------------------------------------------|--------|
|   |   THE SECURITIES EXCHANGE ACT OF 1934                  |   |
|   |                                                        |   |

| South Carolina                    |   | 57-1079460          |
|-----------------------------------|--------|---------------------|
| (State or other jurisdiction      |   | (I.R.S. Employer    |
| of incorporation or organization) |   | Identification No.) |

| Large accelerated filer  [   ]                                             |   | Accelerated filer      [ ] |
|-----------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------|
| Non-accelerated filer  [   ] (Do not check if a smaller reporting company) |   | Smaller reporting company  [ X ]               |

----

| PART I - FINANCIAL INFORMATION                                                                                                                    | Page No.   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|------------|
|                                                                                                                                              |       |
| Item 1.     Financial Statements (Unaudited)                                                                             |       |
|                                                                                                                                              |       |
| Condensed Consolidated Balance Sheets – September 30, 2010 and December 31, 2009                                                            | 2          |
|                                                                                                                                              |       |
| Condensed Consolidated Statements of Income – Nine months ended September 30, 2010 and 2009                                                 | 3          |
|                                                                                                                                              |       |
| Condensed Consolidated Statements of Income – Three months ended September 30, 2010 and 2009                                                | 4          |
|                                                                                                                                              |       |
| Condensed Consolidated Statements Changes in Shareholders' Equity and Comprehensive Income (Loss) - Nine months ended September 30, 2010 and 2009 | 5          |
|                                                                                                                                              |       |
| Condensed Consolidated Statements of Cash Flows - Nine months ended September 30, 2010 and 2009                                                   | 6          |
|                                                                                                                                              |       |
| Notes to Condensed Consolidated Financial Statements                                                                                              |  7-13 |
|                                                                                                                                              |       |
| Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations                                         | 14-24      |
|                                                                                                                                              |       |
| Item 3.   Quantitative and Qualitative Disclosures About Market Risk                                                                    | 25         |
|                                                                                                                                              |       |
| Item 4.   Controls and Procedures                                                                                                       | 25         |
|                                                                                                                                              |       |
| PART II - OTHER INFORMATION                                                                                                                       |       |
|                                                                                                                                              |       |
| Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds                                                              | 26         |
|                                                                                                                                              |       |
| Item 6.   Exhibits                                                                                                                 | 26         |
|                                                                                                                                              |       |
| Signatures                                                                                                                                        | 26         |
|                                                                                                                                              |       |
| Exhibit Index                                                                                                                                     | 27         |

----

| Item 1 - Financial Statements                             |   |          |           |   |         |   |
|-----------------------------------------------------------|--------|---------------|----------------|--------|--------------|--------|
|                                                      |   | September 30, |           |   | December 31, |   |
|                                                      |   | 2010          |           |   | 2009         |   |
|                                                      |   | (Unaudited)   |           |   |         |   |
| Assets                                                    |   |          |           |   |         |   |
| Cash and cash equivalents:                                |   |          |           |   |         |   |
| Cash and due from banks                                   |   | $             | 16,411,271     |   |         | $      | 40,790,143 |   |
| Federal funds sold                                        |   |          |  - . |   |         |   | 108,587 |   |
| Total cash and cash equivalents                           |   |          | 16,411,271     |   |         |   | 40,898,730 |   |
| Investment securities                                     |   |          |           |   |         |   |   |   |
| Available for sale                                        |   |          | 74,833,246     |   |         |   | 60,775,809 |   |
| Federal Home Loan Bank Stock, at cost                     |   |          | 4,266,200      |   |         |   | 4,266,200 |   |
| Total investment securities                               |   |          | 79,099,446     |   |         |   | 65,042,009 |   |
| Loans held for sale                                       |   |          | 291,567        |   |         |   | 320,079 |   |
| Loans, net of allowance of $9,768,724 and $10,041,920     |   |          | 326,969,455    |   |         |   | 346,870,313 |   |
| Premises and equipment, net                               |   |          | 22,701,406     |   |         |   | 22,692,344 |   |
| Other real estate owned, net                              |   |          | 8,425,157      |   |         |   | 9,789,410 |   |
| Company owned life insurance                              |   |          | 11,415,710     |   |         |   | 19,234,080 |   |
| Other assets                                              |   |          | 10,671,786     |   |         |   | 16,560,328 |   |
| Total assets                                              |   | $             | 475,985,798    |   |         | $      | 521,407,293 |   |
|                                                      |   |          |           |   |         |   |   |   |
| Liabilities                                               |   |          |           |   |         |   |   |   |
| Deposits                                                  |   |          |           |   |         |   |   |   |
| Noninterest-bearing                                       |   | $             | 29,677,643     |   |         | $      | 25,921,641 |   |
| Interest-bearing                                          |   |          | 313,180,310    |   |         |   | 342,615,299 |   |
| Total deposits                                            |   |          | 342,857,953    |   |         |   | 368,536,940 |   |
| Securities sold under agreements to repurchase            |   |          | 4,754,271      |   |         |   | 9,404,218 |   |
| Borrowings on cash value of Company owned life insurance  |   |          | -              |   |         |   | 7,640,636 |   |
| Federal Home Loan Bank Borrowings                         |   |          | 67,000,000     |   |         |   | 74,000,000 |   |
| Junior subordinated debentures                            |   |          | 10,310,000     |   |         |   | 10,310,000 |   |
| Other liabilities                                         |   |          | 3,175,196      |   |         |   | 6,434,707 |   |
| Total liabilities                                         |   |          | 428,097,420    |   |         |   | 476,326,501 |   |
| Shareholders’ Equity                                |   |          |           |   |         |   |   |   |
| Common stock (no par value; 20,000,000 shares authorized; |   |          |           |   |         |   |   |   |
| 4,740,641 shares outstanding at September 30, 2010 and    |   |          |           |   |         |   |   |   |
| 4,542,023 at December 31, 2009)                           |   |          | 54,132,369     |   |         |   | 53,583,283 |   |
| Retained deficit                                          |   |          | (5,031,003     | )      |         |   | (6,108,846 | ) |
| Accumulated other comprehensive loss                      |   |          | (1,212,988     | )      |         |   | (2,393,645 | ) |
| Total shareholders’ equity                          |   |          | 47,888,378     |   |         |   | 45,080,792 |   |
| Total liabilities and shareholders’ equity          |   | $             | 475,985,798    |   |         | $      | 521,407,293 |   |
|                                                      |   |          |           |   |         |   |   |   |

----

|                                                                                |   | For the Nine Months Ended |       |
|-------------------------------------------------------------------------------------|--------|---------------------------|------------|
|                                                                                |   | September 30,             |       |
|                                                                                |   | 2010                      |       |   | 2009 |   |
| Interest income                                                                     |   |                      |       |   |   |   |
| Loans, including fees                                                               |   | $                         | 14,271,233 |   |   | $ | 17,321,288 |   |
| Investment securities                                                               |   |                      | 1,925,894  |   |   |   | 1,996,536 |   |
| Cash and federal funds sold                                                         |   |                      | 41,000     |   |   |   | 1,859 |   |
| Total interest income                                                               |   |                      | 16,238,127 |   |   |   | 19,319,683 |   |
| Interest expense                                                                    |   |                      |       |   |   |   |   |   |
| Deposits and borrowings                                                             |   |                      | 7,425,141  |   |   |   | 9,248,914 |   |
| Net interest income                                                                 |   |                      | 8,812,986  |   |   |   | 10,070,769 |   |
| Provision for loan losses                                                           |   |                      | 2,125,000  |   |   |   | 1,550,000 |   |
| Net interest income after provision for loan losses                                 |   |                      | 6,687,986  |   |   |   | 8,520,769 |   |
| Noninterest income                                                                  |   |                      |       |   |   |   |   |   |
| Service fees on deposit accounts                                                    |   |                      | 854,864    |   |   |   | 869,795 |   |
| Fees on loans sold                                                                  |   |                      | 113,550    |   |   |   | 247,604 |   |
|     Gain on sale of available for sale securities               |   |                      | 2,279,466  |   |   |   | 1,310,043 |   |
| Gain (loss) on sale of other real estate owned                                      |   |                      | 666,356    |   |   |   | (33,845 | ) |
| Gain on sale of premises and equipment                                              |   |                      | 123,318    |   |   |   | 5,413 |   |
| Rental income                                                                       |   |                      | 211,394    |   |   |   | 280,006 |   |
|     Company owned life insurance earnings                       |   |                      | 329,415    |   |   |   | 560,301 |   |
| Other                                                                               |   |                      | 136,501    |   |   |   | 148,045 |   |
| Total noninterest income                                                            |   |                      | 4,714,864  |   |   |   | 3,387,362 |   |
| Noninterest expenses                                                                |   |                      |       |   |   |   |   |   |
| Salaries and employment benefits                                                    |   |                      | 4,956,679  |   |   |   | 5,553,170 |   |
| Occupancy                                                                           |   |                      | 1,045,564  |   |   |   | 1,050,960 |   |
| Furniture and equipment                                                             |   |                      | 1,091,516  |   |   |   | 985,537 |   |
| Software                                                                            |   |                      | 278,508    |   |   |   | 258,240 |   |
| Insurance                                                                           |   |                      | 720,303    |   |   |   | 952,824 |   |
|     Professional fees                                           |   |                      | 559,434    |   |   |   | 589,590 |   |
| Travel and entertainment                                                            |   |                      | 122,156    |   |   |   | 144,711 |   |
| Telephone, postage and supplies                                                     |   |                      | 260,315    |   |   |   | 277,471 |   |
|     Foreclosure fees and other real estate owned carrying costs |   |                      | 372,094    |   |   |   | 116,643 |   |
| Impairment charges on other real estate owned                                       |   |                      | -          |   |   |   | 240,441 |   |
| Other operating expenses                                                            |   |                      | 588,292    |   |   |   | 713,501 |   |
| Total noninterest expenses                                                          |   |                      | 9,994,861  |   |   |   | 10,883,088 |   |
| Income before income taxes                                                          |   |                      | 1,407,989  |   |   |   | 1,025,043 |   |
| Income tax expense (benefit)                                                        |   |                      | 330,146    |   |   |   | (4,087 | ) |
| Net income                                                                          |   | $                         | 1,077,843  |   |   | $ | 1,029,130 |   |
| Basic net income per common share                                                   |   | $                         | .24        |   |   | $ | .23 |   |
| Diluted net income per common share                                                 |   | $                         | .24        |   |   | $ | .23 |   |
| Weighted average shares outstanding                                                 |   |                      |       |   |   |   |   |   |
| Basic                                                                               |   |                      | 4,575,949  |   |   |   | 4,528,821 |   |
| Diluted                                                                             |   |                      | 4,575,949  |   |   |   | 4,528,821 |   |

----

|                                                                                |   | For the Three Months Ended |      |
|-------------------------------------------------------------------------------------|--------|----------------------------|-----------|
|                                                                                |   | September 30,              |      |
|                                                                                |   | 2010                       |      |   | 2009 |   |
| Interest income                                                                     |   |                       |      |   |   |   |
| Loans, including fees                                                               |   | $                          | 4,720,871 |   |   | $ | 5,525,107 |   |
| Investment securities                                                               |   |                       | 529,658   |   |   |   | 559,737 |   |
| Cash and federal funds sold                                                         |   |                       | 17,959    |   |   |   | 903 |   |
| Total interest income                                                               |   |                       | 5,268,488 |   |   |   | 6,085,747 |   |
| Interest expense                                                                    |   |                       |      |   |   |   |   |   |
| Deposits and borrowings                                                             |   |                       | 2,370,117 |   |   |   | 2,644,885 |   |
| Net interest income                                                                 |   |                       | 2,898,371 |   |   |   | 3,440,862 |   |
| Provision for loan losses                                                           |   |                       | 325,000   |   |   |   | 1,000,000 |   |
| Net interest income after provision for loan losses                                 |   |                       | 2,573,371 |   |   |   | 2,440,862 |   |
| Noninterest income                                                                  |   |                       |      |   |   |   |   |   |
| Service fees on deposit accounts                                                    |   |                       | 311,212   |   |   |   | 272,569 |   |
| Fees on loans sold                                                                  |   |                       | 50,173    |   |   |   | 82,100 |   |
|     Gain on sale of available for sale securities               |   |                       | 660,507   |   |   |   | 424,439 |   |
| Gain (loss) on sale of other real estate owned                                      |   |                       | 26,243    |   |   |   | (21,909 | ) |
| Rental income                                                                       |   |                       | 11,466    |   |   |   | 122,084 |   |
| Company owned life insurance earnings                                               |   |                       | 121,510   |   |   |   | 186,408 |   |
| Other                                                                               |   |                       | 24,429    |   |   |   | 42,997 |   |
| Total noninterest income                                                            |   |                       | 1,205,540 |   |   |   | 1,108,688 |   |
| Noninterest expenses                                                                |   |                       |      |   |   |   |   |   |
| Salaries and employment benefits                                                    |   |                       | 1,636,121 |   |   |   | 1,759,278 |   |
| Occupancy                                                                           |   |                       | 334,383   |   |   |   | 337,892 |   |
| Furniture and equipment                                                             |   |                       | 363,755   |   |   |   | 313,119 |   |
| Software                                                                            |   |                       | 80,962    |   |   |   | 83,583 |   |
| Insurance                                                                           |   |                       | 325,882   |   |   |   | 198,484 |   |
| Professional fees                                                                   |   |                       | 159,203   |   |   |   | 140,418 |   |
|     Travel and entertainment                                    |   |                       | 37,655    |   |   |   | 37,253 |   |
| Telephone, postage, and supplies                                                    |   |                       | 82,581    |   |   |   | 88,084 |   |
|     Foreclosure fees and other real estate owned carrying costs |   |                       | 126,355   |   |   |   | 52,902 |   |
| Impairment charges on other real estate owned                                       |   |                       | -         |   |   |   | 47,000 |   |
| Other operating expenses                                                            |   |                       | 203,902   |   |   |   | 185,362 |   |
| Total noninterest expenses                                                          |   |                       | 3,350,799 |   |   |   | 3,243,375 |   |
| Income before income taxes                                                          |   |                       | 428,112   |   |   |   | 306,175 |   |
| Income tax expense                                                                  |   |                       | 92,421    |   |   |   | 1,778 |   |
| Net income                                                                          |   | $                          | 335,691   |   |   | $ | 304,397 |   |
| Basic net income per common share                                                   |   | $                          | .07       |   |   | $ | .07 |   |
| Diluted net income per common share                                                 |   | $                          | .07       |   |   | $ | .07 |   |
| Weighted average shares outstanding                                                 |   |                       |      |   |   |   |   |   |
| Basic                                                                               |   |                       | 4,619,322 |   |   |   | 4,535,274 |   |
| Diluted                                                                             |   |                       | 4,619,322 |   |   |   | 4,535,274 |   |

----

|                                                                                                     |   |   Common Stock |      |   |  Retainedearnings |   |       | Accumulatedothercomprehensiveincome |   |   |       |   |
|----------------------------------------------------------------------------------------------------------|--------|--------------------------|-----------|--------|------------------------|--------|------------|-------------------------------------|--------|--------|------------|--------|
|                                                                                                     |   | Shares                   |      |   | Amount                 |   |       | (deficit)                           |   |   | (loss)     |   |   | Total |   |
| Balance, December 31, 2008                                                                               |   |                     | 4,513,463 |   |                   | $      | 53,441,978 |                                |   | $      | 2,814,566  |   |   | $ | (1,023,440 | ) |   | $ | 55,233,104 |   |
|                                                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
| Net income for the period                                                                                |   |                     |      |   |                   |   |       |                                |   |   | 1,029,130  |   |   |   |   |   |   |   | 1,029,130 |   |
|                                                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
| Other comprehensive loss                                                                                 |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
| Unrealized holding gains                                                                                 |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
|    on securities available for sale                                                       |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
| net of taxes of $17,779                                                                                  |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   | 31,611 |   |   |   | 31,611 |   |
|                                                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
| Less reclassification adjustment for                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
| gains included in net income, net of                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
| taxes of $471,615                                                                                        |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   | (838,428 | ) |   |   | (838,428 | ) |
|                                                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
| Comprehensive income                                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   | 222,313 |   |
|                                                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
| Employee stock purchase plan                                                                             |   |                     | 21,811    |   |                   |   | 108,100    |                                |   |   |       |   |   |   | .  |   |   |   | 108,100 |   |
|                                                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
| Balance, September 30, 2009                                                                              |   |                     | 4,535,274 |   |                   | $      | 53,550,078 |                                |   | $      | 3,843,696  |   |   | $ | (1,830,257 | ) |   | $ | 55,563,517 |   |
|                                                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2009                                                                               |   |                     | 4,542,023 |   |                   | $      | 53,583,283 |                                |   | $      | (6,108,846 | )      |   | $ | (2,393,645 | ) |   | $ | 45,080,792 |   |
|                                                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
| Net income for the period                                                                                |   |                     |      |   |                   |   |       |                                |   |   | 1,077,843  |   |   |   |   |   |   |   | 1,077,843 |   |
|                                                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
| Other comprehensive income                                                                               |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
| Unrealized holding gains        on securities available for sale |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
|     net of taxes of $1,484,727                                                       |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   | 2,639,515 |   |   |   | 2,639,515 |   |
|                                                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
| Less reclassification adjustment for                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
| gains included in net income, net of                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
| taxes of $820,608                                                                                        |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   | (1,458,858 | ) |   |   | (1,458,858 | ) |
|                                                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
| Comprehensive income                                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   | 2,258,500 |   |
|                                                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
|     Proceeds from issuance of shares                                                 |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
|         pursuant to private offering to                          |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
|         directors and officers, net of offering                  |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
|         costs of $19,838                                         |   |                     | 170,815   |   |                   |   | 462,908    |                                |   |   |       |   |   |   |   |   |   |   | 462,908 |   |
|                                                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
| Employee stock purchase plan                                                                             |   |                     | 27,803    |   |                   |   | 86,178     |                                |   |   | .          |   |   |   |     . . |   |   |   | 86,178 |   |
|                                                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |
| Balance, September 30, 2010                                                                              |   |                     | 4,740,641 |   |                   | $      | 54,132,369 |                                |   | $      | (5,031,003 | )      |   | $ | (1,212,988 | ) |   | $ | 47,888,378 |   |
|                                                                                                     |   |                     |      |   |                   |   |       |                                |   |   |       |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                  |   | For the nine months ended |         |
|-----------------------------------------------------------------------------------------------------------------------|--------|---------------------------|--------------|
|                                                                                                                  |   | September 30,             |         |
|                                                                                                                  |   | 2010                      |         |   | 2009 |   |
| Operating activities                                                                                                  |   |                      |         |   |   |   |
| Net income                                                                                                            |   | $                         | 1,077,843    |   |   | $ | 1,029,130 |   |
| Adjustments to reconcile net income to net                                                                            |   |                      |         |   |   |   |   |   |
| cash provided by (used for) operating activities                                                                      |   |                      |         |   |   |   |   |   |
| (Increase) decrease in deferred income taxes                                                                          |   |                      | 1,308,778    |   |   |   | (1,556,428 | ) |
| Provision for loan losses                                                                                             |   |                      | 2,125,000    |   |   |   | 1,550,000 |   |
| Depreciation and amortization                                                                                         |   |                      | 810,498      |   |   |   | 903,346 |   |
| Discount accretion and premium amortization                                                                           |   |                      | 321,864      |   |   |   | 14,317 |   |
| Gain on sale of securities                                                                                            |   |                      | (2,279,466   | ) |   |   | (1,310,043 | ) |
| Gain on sale of premises and equipment                                                                                |   |                      | (123,318     | ) |   |   | (5,413 | ) |
|            Deferred gain on disposal of premises and equipment |   |                      | -            |   |   |   | (185,879 | ) |
| (Gain) loss on sale of other real estate owned                                                                        |   |                      | (666,356     | ) |   |   | 33,845 |   |
|         Impairment charges on other real estate owned                         |   |                      | -            |   |   |   | 240,441 |   |
| Originations of loans held for sale                                                                                   |   |                      | (8,278,365   | ) |   |   | (56,376,382 | ) |
| Proceeds from sales of loans held for sale                                                                            |   |                      | 8,306,877    |   |   |   | 55,732,086 |   |
| Increase in value of Company owned life insurance                                                                     |   |                      | (329,415     | ) |   |   | (560,301 | ) |
| Decrease in other assets                                                                                              |   |                      | 4,409,476    |   |   |   | 292,704 |   |
| Decrease in other liabilities                                                                                         |   |                      | (3,259,511   | ) |   |   | (673,491 | ) |
|                                                                                                                  |   |                      |         |   |   |   |   |   |
| Net cash provided by (used for) operating activities                                                                  |   |                      | 3,423,905    |   |   |   | (872,068 | ) |
|                                                                                                                  |   |                      |         |   |   |   |   |   |
| Investing activities                                                                                                  |   |                      |         |   |   |   |   |   |
| Sales of Federal Home Loan Bank stock                                                                                 |   |                      | -            |   |   |   | 243,300 |   |
| Purchases of investment securities available-for-sale                                                                 |   |                      | (121,842,529 | ) |   |   | (33,986,354 | ) |
|     Sales, calls, and maturities of investment securities available-for-sale                      |   |                      | 111,093,639  |   |   |   | 43,886,268 |   |
| Proceeds from sales of premises and equipment                                                                         |   |                      | 823,318      |   |   |   | 665,377 |   |
|     Purchases of premises and equipment                                                           |   |                      | (1,519,560   | ) |   |   | (355,348 | ) |
| Proceeds from sales of other real estate owned                                                                        |   |                      | 7,268,906    |   |   |   | 2,474,938 |   |
| Proceeds from liquidation of Company owned life insurance                                                             |   |                      | 8,147,785    |   |   |   | - |   |
| Capital expenditures to other real estate owned                                                                       |   |                      | (57,966      | ) |   |   | (77,292 | ) |
| Net decrease in loans                                                                                                 |   |                      | 12,595,527   |   |   |   | 13,285,768 |   |
|                                                                                                                  |   |                      |         |   |   |   |   |   |
| Net cash provided by investing activities                                                                             |   |                      | 16,509,120   |   |   |   | 26,136,657 |   |
|                                                                                                                  |   |                      |         |   |   |   |   |   |
| Financing activities                                                                                                  |   |                      |         |   |   |   |   |   |
| Increase (decrease) in borrowings                                                                                     |   |                      | (19,290,583  | ) |   |   | 229,642 |   |
| Net proceeds from issuances of stock                                                                                  |   |                      | 549,086      |   |   |   | 108,100 |   |
| Net decrease in deposits                                                                                              |   |                      | (25,678,987  | ) |   |   | (24,282,512 | ) |
|                                                                                                                  |   |                      |         |   |   |   |   |   |
| Net cash used for financing activities                                                                                |   |                      | (44,420,484  | ) |   |   | (23,944,770 | ) |
|                                                                                                                  |   |                      |         |   |   |   |   |   |
| Increase (decrease) in cash and cash equivalents                                                                      |   |                      | (24,487,459  | ) |   |   | 1,319,819 |   |
|                                                                                                                  |   |                      |         |   |   |   |   |   |
| Cash and cash equivalents, beginning of period                                                                        |   |                      | 40,898,730   |   |   |   | 22,561,570 |   |
|                                                                                                                  |   |                      |         |   |   |   |   |   |
| Cash and cash equivalents, end of period                                                                              |   | $                         | 16,411,271   |   |   | $ | 23,881,389 |   |
|                                                                                                                  |   |                      |         |   |   |   |   |   |
| Cash paid during the year for:                                                                                        |   |                      |         |   |   |   |   |   |
| Income taxes                                                                                                          |   | $                         | 612,367      |   |   | $ | 1,001,779 |   |
| Interest                                                                                                              |   | $                         | 7,188,681    |   |   | $ | 10,829,277 |   |

----

----

|                 |   | September 30, 2010 |       |
|----------------------|--------|--------------------|------------|
|                 |   | Amortized          |       |   | Gross Unrealized |   |   | Estimated |   |
|                 |   | Cost               |       |   | Gains |   |   | Losses |   |   | Fair value |   |
| Available for sale   |   |               |       |   |   |   |   |   |   |   |   |   |
| Mortgage backed      |   | $                  | 62,296,593 |   |   | $ | 599,109 |   |   | $ | 100,506 |   |   | $ | 62,795,196 |   |
| Municipal securities |   |               | 9,838,830  |   |   |   | 435,644 |   |   |   | 23,050 |   |   |   | 10,251,424 |   |
| Other                |   |               | 4,657,322  |   |   |   | .  - |   |   |   | 2,870,696 |   |   |   | 1,786,626 |   |
| Total                |   | $                  | 76,792,745 |   |   | $ | 1,034,753 |   |   | $ | 2,994,252 |   |   | $ | 74,833,246 |   |
|                 |   |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                 |   | December 31, 2009 |       |
|----------------------|--------|-------------------|------------|
|                 |   | Amortized         |       |   | Gross Unrealized |   |   | Estimated |   |
| Available for sale   |   | Cost              |       |   | Gains |   |   | Losses |   |   | Fair value |   |
| Mortgage backed      |   | $                 | 52,239,896 |   |   | $ | 415,749 |   |   | $ | 801,319 |   |   | $ | 51,854,326 |   |
| Municipal securities |   |              | 7,195,637  |   |   |   | 101,185 |   |   |   | 81,095 |   |   |   | 7,215,727 |   |
| Other                |   |              | 4,650,721  |   |   |   | - . |   |   |   | 2,944,965 |   |   |   | 1,705,756 |   |
| Total                |   | $                 | 64,086,254 |   |   | $ | 516,934 |   |   | $ | 3,827,379 |   |   | $ | 60,775,809 |   |

----

|                 |   | September 30, 2010 |          |
|----------------------|--------|--------------------|---------------|
|                 |   | Less than          |          |   | Twelve months |   |   |   |   |
|                 |   | twelve months      |          |   | or more |   |   | Total |   |
|                 |   |               |          |   | Unrealized |   |   |   |   |   | Unrealized |   |   |   |   |   | Unrealized |   |
|                 |   | Fair value         |          |   | losses |   |   | Fair value |   |   | losses |   |   | Fair value |   |   | losses |   |
| Mortgage backed      |   | $                  | 15,801,294    |   |   | $ | 11,005 |   |   | $ | 1,134,677 |   |   | $ | 89,501 |   |   | $ | 16,935,971 |   |   | $ | 100,506 |   |
| Municipal securities |   |               | -             |   |   |   | - |   |   |   | 466,555 |   |   |   | 23,050 |   |   |   | 466,555 |   |   |   | 23,050 |   |
| Other                |   |               |  -  |   |   |   | - |   |   |   | 826,626 |   |   |   | 2,870,696 |   |   |   | 826,626 |   |   |   | 2,870,696 |   |
|                 |   | $                  | 15,801,294    |   |   | $ | 11,005 |   |   | $ | 2,427,858 |   |   | $ | 2,983,247 |   |   | $ | 18,229,152 |   |   | $ | 2,994,252 |   |
| Total                |   |               |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                 |   | December 31, 2009 |          |
|----------------------|--------|-------------------|---------------|
|                 |   | Less than         |          |   | Twelve months |   |   |   |   |
|                 |   | twelve months     |          |   | or more |   |   | Total |   |
|                 |   |              |          |   | Unrealized |   |   |   |   |   | Unrealized |   |   |   |   |   | Unrealized |   |
|                 |   | Fair value        |          |   | losses |   |   | Fair value |   |   | losses |   |   | Fair value |   |   | losses |   |
| Mortgage backed      |   | $                 | 15,072,875    |   |   | $ | 454,116 |   |   | $ | 3,090,849 |   |   | $ | 347,203 |   |   | $ | 18,163,724 |   |   | $ | 801,319 |   |
| Municipal securities |   |              | 2,025,865     |   |   |   | 25,516 |   |   |   | 1,416,119 |   |   |   | 55,579 |   |   |   | 3,441,984 |   |   |   | 81,095 |   |
| Other                |   |              |  -  |   |   |   |  - |   |   |   | 745,756 |   |   |   | 2,944,965 |   |   |   | 745,756 |   |   |   | 2,944,965 |   |
|                 |   |              |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                |   | $                 | 17,098,740    |   |   | $ | 479,632 |   |   | $ | 5,252,724 |   |   | $ | 3,347,747 |   |   | $ | 22,351,464 |   |   | $ | 3,827,379 |   |

----

|                                                       |   | Amortized |       |   | Fair   |   |
|------------------------------------------------------------|--------|-----------|------------|--------|--------|--------|
|                                                       |   | Cost      |       |   | Value  |   |
| Due after five but within ten years                        |   | $         | 1,827,994  |   |   | $      | 1,939,971 |   |
| Due after ten years                                        |   |      | 12,518,158 |   |   |   | 9,948,079 |   |
| Mortgage backed                                            |   |      | 62,296,593 |   |   |   | 62,795,196 |   |
|     Equity securities with no maturity |   |      | 150,000    |   |   |   | 150,000 |   |
| Total investment securities available-for-sale             |   | $         | 76,792,745 |   |   | $      | 74,833,246 |   |

|                       |   | September 30, 2010                           |   |
|----------------------------|--------|----------------------------------------------|--------|
|                       |   | Quoted market priceinactive markets(Level 1) |   |   | Significant otherobservable inputs(Level 2) |   |   | Significant unobservableinputs(Level 3) |   |
| Mortgage backed securities |   | $                                            | -      |   |   | $ | 62,795 |   |   | $ | - |   |
|                       |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Municipal securities       |   |                                         | -      |   |   |   | 10,251 |   |   |   | - |   |
|                       |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Other securities           |   |                                         | -      |   |   |   | 460 |   |   |   | 1,327 |   |
|                       |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Loans held for sale        |   |                                         | -      |   |   |   | 292 |   |   |   | - |   |
|                       |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Total assets at fair value |   | $                                            | -      |   |   | $ | 73,798 |   |   | $ | 1,327 |   |

----

|                        |   | December 31, 2009                            |   |
|-----------------------------|--------|----------------------------------------------|--------|
|                        |   | Quoted market priceinactive markets(Level 1) |   |   | Significant otherobservable inputs(Level 2) |   |   | Significant unobservableinputs(Level 3) |   |
|                        |   |                                         |   |   |   |   |   |   |   |
| Mortgage backed securities  |   | $                                            | -      |   |   | $ | 51,855 |   |   | $ | - |   |
|                        |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Municipal securities        |   |                                         | -      |   |   |   | 7,216 |   |   |   | - |   |
|                        |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Other securities            |   |                                         | -      |   |   |   | 460 |   |   |   | 1,245 |   |
|                        |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Loans held for sale         |   |                                         | -      |   |   |   | 320 |   |   |   | - |   |
|                        |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Interest rate swap          |   |                                         |   |   |   |   |   |   |   |   |   |   |
|  derivative instrument |   |                                         | -      |   |   |   | (329 | ) |   |   | - |   |
| Total assets at fair value  |   | $                                            | -      |   |   | $ | 59,522 |   |   | $ | 1,245 |   |

|                          |   | September 30, 2010                           |   |
|-------------------------------|--------|----------------------------------------------|--------|
|                          |   | Quoted market priceinactive markets(Level 1) |   |   | Significant otherobservable inputs(Level 2) |   |   | Significant unobservableinputs(Level 3) |   |
|                          |   |                                         |   |   |   |   |   |   |   |
| Impaired Loans                |   |                                         |   |   | $ | 20,316 |   |   |   |   |
|                          |   |                                         |   |   |   |   |   |   |   |   |
| Other Real Estate Owned  |   |                                         | -      |   |   |   | 8,425 |   |   |   | - |   |
| Total assets at fair value    |   | $                                            | -      |   |   | $ | 28,741 |   |   | $ | - |   |

|                       |   | December 31, 2009                            |    |
|----------------------------|--------|----------------------------------------------|---------|
|                       |   | Quoted market priceinactive markets(Level 1) |    |   | Significant otherobservable inputs(Level 2) |   |   | Significant unobservableinputs(Level 3) |   |
|                       |   |                                         |    |   |   |   |   |   |   |
| Impaired Loans             |   |                                         |    |   | $ | 23,478 |   |   |   |   |
|                       |   |                                         |    |   |   |   |   |   |   |   |
| Other Real Estate Owned    |   |                                         |  - |   |   |   | 9,789 |   |   |   | - |   |
| Total assets at fair value |   | $                                            | -       |   |   | $ | 33,267 |   |   | $ | - |   |
|                       |   |                                         |    |   |   |   |   |   |   |   |   |   |

----

|                      |   | September 30, |   |
|---------------------------|--------|---------------|--------|
|                      |   | 2010          |   |   | 2009 |   |
| Beginning of Year Balance |   | $             | 1,245  |   |   | $ | 2,901 |   |
| Discount Accretion        |   |          | 7      |   |   |   | 4 |   |
| Principal Paydowns        |   |          | -      |   |   |   | (7 | ) |
| Unrealized Gain (Loss)    |   |          | 75     |   |   |   | (1,473 | ) |
| Ending Balance            |   | $             | 1,327  |   |   | $ | 1,425 |   |

----

|                                 |   | September 30, |    |   | December 31, |   |
|--------------------------------------|--------|---------------|---------|--------|--------------|--------|
|                                 |   | 2010          |    |   | 2009         |   |
|                                 |   | Carrying      |    |   | Fair         |   |   | Carrying |   |   | Fair |   |
|                                 |   | Amount        |    |   | Value        |   |   | Amount |   |   | Value |   |
| Financial assets:                    |   |          |    |   |         |   |   |   |   |   |   |   |
| Cash and due from banks              |   | $             | 16,411  |   |         | $      | 16,411 |   |   | $ | 40,790 |   |   | $ | 40,790 |   |
| Federal funds sold                   |   |          | -       |   |         |   | - |   |   |   | 109 |   |   |   | 109 |   |
| Investment securities                |   |          | 79,099  |   |         |   | 79,099 |   |   |   | 65,042 |   |   |   | 65,042 |   |
| Loans held for sale                  |   |          | 292     |   |         |   | 292 |   |   |   | 320 |   |   |   | 320 |   |
| Loans, gross                         |   |          | 336,738 |   |         |   | 334,934 |   |   |   | 356,912 |   |   |   | 358,618 |   |
| Other Real Estate Owned, net         |   |          | 8,425   |   |         |   | 8,425 |   |   |   | 9,789 |   |   |   | 9,789 |   |
| Financial liabilities:               |   |          |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                             |   |          | 342,858 |   |         |   | 337,972 |   |   |   | 368,537 |   |   |   | 360,805 |   |
| Short term borrowings                |   |          | 4,754   |   |         |   | 4,754 |   |   |   | 17,045 |   |   |   | 17,045 |   |
| Advances from Federal Home Loan Bank |   |          | 67,000  |   |         |   | 60,231 |   |   |   | 74,000 |   |   |   | 69,363 |   |
| Junior subordinated debentures       |   |          | 10,310  |   |         |   | 10,310 |   |   |   | 10,310 |   |   |   | 10,310 |   |
|                                 |   |          |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
|                                 |   | Notional      |    |   | Fair         |   |   | Notional |   |   | Fair |   |
|                                 |   | Amount        |    |   | Value        |   |   | Amount |   |   | Value |   |
| Financial instruments with off-      |   |          |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Balance sheet risk:                  |   |          |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Commitments to extend credit         |   | $             | 22,150  |   |         |   | - |   |   | $ | 21,996 |   |   | $ | - |   |
| Standby letters of credit            |   |          | 640     |   |         |   | - |   |   |   | 767 |   |   |   | - |   |
| Derivative instruments               |   |          | -       |   |         |   | - |   |   |   | 10,000 |   |   |   | (329 | ) |

----

----

----

|                         |   | For the nine months ended |        |   | For the nine months ended |   |
|------------------------------|--------|---------------------------|-------------|--------|---------------------------|--------|
|                         |   | September 30, 2010        |        |   | September 30, 2009        |   |
|                         |   | Average                   |        |   | Income/                   |   |   | Yield/ |   |   | Average |   |   | Income/ |   |   | Yield/ |   |
|                         |   | Balance                   |        |   | Expense                   |   |   | Rate(1) |   |   | Balance |   |   | Expense |   |   | Rate(1) |   |
| Assets                       |   |                      |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and Federal funds sold  |   | $                         | 20,734,528  |   |                      | $      | 41,000 |   |   |   | 0.26 | % |   | $ | 8,376,452 |   |   | $ | 8,187 |   |   |   | 0.13 | % |
| Investments – taxable  |   |                      | 74,189,312  |   |                      |   | 1,664,001 |   |   |   | 3.00 |   |   |   | 48,815,680 |   |   |   | 1,493,872 |   |   |   | 4.09 |   |
| Investments - nontaxable (2) |   |                      | 8,300,816   |   |                      |   | 409,207 |   |   |   | 6.59 |   |   |   | 15,557,884 |   |   |   | 775,525 |   |   |   | 6.66 |   |
| Total investments and        |   |                      |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| federal funds sold           |   |                      | 103,224,656 |   |                      |   | 2,114,208 |   |   |   | 2.74 |   |   |   | 72,750,016 |   |   |   | 2,277,584 |   |   |   | 4.19 |   |
| Loans (3) (4)                |   |                      | 321,367,631 |   |                      |   | 14,271,233 |   |   |   | 5.93 |   |   |   | 373,606,927 |   |   |   | 17,321,288 |   |   |   | 6.19 |   |
| Total earning assets    |   |                      | 424,592,287 |   |                      |   | 16,385,441 |   |   |   | 5.16 | % |   |   | 446,356,943 |   |   |   | 19,598,872 |   |   |   | 5.87 | % |
| Other assets                 |   |                      | 80,371,083  |   |                      |   |   |   |   |   |   |   |   |   | 72,769,845 |   |   |   |   |   |   |   |   |   |
| Total assets                 |   | $                         | 504,963,370 |   |                      |   |   |   |   |   |   |   |   | $ | 519,126,788 |   |   |   |   |   |   |   |   |   |
| Liabilities                  |   |                      |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings and                  |   |                      |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| transaction accounts         |   | $                         | 80,711,032  |   |                      |   | 928,814 |   |   |   | 1.54 | % |   | $ | 64,258,684 |   |   |   | 646,727 |   |   |   | 1.35 | % |
| Time deposits                |   |                      | 246,532,226 |   |                      |   | 3,682,855 |   |   |   | 2.00 |   |   |   | 263,896,916 |   |   |   | 5,728,807 |   |   |   | 2.90 |   |
| Other borrowings             |   |                      | 85,767,962  |   |                      |   | 2,334,991 |   |   |   | 3.64 |   |   |   | 91,579,521 |   |   |   | 2,393,697 |   |   |   | 3.49 |   |
| Subordinated debt            |   |                      | 10,310,000  |   |                      |   | 478,481 |   |   |   | 6.20 |   |   |   | 10,310,000 |   |   |   | 479,683 |   |   |   | 6.22 |   |
| Total interest bearing       |   |                      |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| liabilities                  |   |                      | 423,321,220 |   |                      |   | 7,425,141 |   |   |   | 2.35 |   |   |   | 430,045,121 |   |   |   | 9,248,914 |   |   |   | 2.88 |   |
| Non-interest bearing         |   |                      |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| liabilities                  |   |                      | 35,157,565  |   |                      |   |   |   |   |   |   |   |   |   | 33,683,357 |   |   |   |   |   |   |   |   |   |
| Total liabilities            |   |                      | 458,478,785 |   |                      |   | 7,425,141 |   |   |   | 2.17 |   |   |   | 463,728,478 |   |   |   | 9,248,914 |   |   |   | 2.67 |   |
| Equity                       |   |                      | 46,484,585  |   |                      |   |   |   |   |   |   |   |   |   | 55,398,310 |   |   |   |   |   |   |   |   |   |
| Total liabilities            |   |                      |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and equity                   |   | $                         | 504,963,370 |   |                      |   |   |   |   |   |   |   |   | $ | 519,126,788 |   |   |   |   |   |   |   |   |   |
| Net interest                 |   |                      |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| income/margin (5)            |   |                      |        |   |                      | $      | 8,960,300 |   |   |   | 2.82 | % |   |   |   |   |   | $ | 10,349,958 |   |   |   | 3.10 | % |
| Net interest spread (6)      |   |                      |        |   |                      |   |   |   |   |   | 2.81 | % |   |   |   |   |   |   |   |   |   |   | 2.99 | % |
|                         |   |                      |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| (1)   | Annualized |
|-----------------|------------|

| (2)   | Tax equivalent yields for nontaxable investments assuming a 36% tax rate. |
|-----------------|---------------------------------------------------------------------------|

| (3)   | Does not include nonaccruing loans. |
|-----------------|-------------------------------------|

| (4)   | Income includes loan fees of $414,861 in 2010 and $500,686 in 2009. |
|-----------------|---------------------------------------------------------------------|

| (5)   | Net interest income divided by total earning assets. |
|-----------------|------------------------------------------------------|

| (6)   | Total interest earning assets yield less interest bearing liabilities rate. |
|-----------------|-----------------------------------------------------------------------------|

----

|                         |   | For the three months ended |        |   | For the three months ended |   |
|------------------------------|--------|----------------------------|-------------|--------|----------------------------|--------|
|                         |   | September 30, 2010         |        |   | September 30, 2009         |   |
|                         |   | Average                    |        |   | Income/                    |   |   | Yield/ |   |   | Average |   |   | Income/ |   |   | Yield/ |   |
|                         |   | Balance                    |        |   | Expense                    |   |   | Rate(1) |   |   | Balance |   |   | Expense |   |   | Rate(1) |   |
| Assets                       |   |                       |        |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and Federal funds sold  |   | $                          | 25,469,846  |   |                       | $      | 17,959 |   |   |   | 0.28 | % |   | $ | 6,498,688 |   |   | $ | 2,523 |   |   |   | 0.15 | % |
| Investments – taxable  |   |                       | 70,849,740  |   |                       |   | 430,956 |   |   |   | 2.41 |   |   |   | 47,071,574 |   |   |   | 429,571 |   |   |   | 3.62 |   |
| Investments - nontaxable (2) |   |                       | 9,806,684   |   |                       |   | 154,222 |   |   |   | 6.24 |   |   |   | 12,017,236 |   |   |   | 200,853 |   |   |   | 6.63 |   |
| Total investments and        |   |                       |        |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| federal funds sold           |   |                       | 106,126,270 |   |                       |   | 603,137 |   |   |   | 2.25 |   |   |   | 65,587,498 |   |   |   | 632,947 |   |   |   | 3.83 |   |
| Loans (3) (4)                |   |                       | 317,397,567 |   |                       |   | 4,720,871 |   |   |   | 5.90 |   |   |   | 363,638,083 |   |   |   | 5,525,107 |   |   |   | 6.03 |   |
| Total earning assets         |   |                       | 423,523,837 |   |                       |   | 5,324,008 |   |   |   | 4.99 | % |   |   | 429,225,581 |   |   |   | 6,158,054 |   |   |   | 5.69 | % |
| Other assets                 |   |                       | 75,477,153  |   |                       |   |   |   |   |   |   |   |   |   | 78,436,600 |   |   |   |   |   |   |   |   |   |
| Total assets                 |   | $                          | 499,000,990 |   |                       |   |   |   |   |   |   |   |   | $ | 507,662,181 |   |   |   |   |   |   |   |   |   |
| Liabilities                  |   |                       |        |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings and                  |   |                       |        |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| transaction accounts         |   | $                          | 84,763,770  |   |                       |   | 313,612 |   |   |   | 1.47 | % |   | $ | 73,486,586 |   |   |   | 285,756 |   |   |   | 1.54 | % |
| Time deposits                |   |                       | 232,886,354 |   |                       |   | 1,122,681 |   |   |   | 1.91 |   |   |   | 240,451,010 |   |   |   | 1,405,020 |   |   |   | 2.32 |   |
| Other borrowings             |   |                       | 85,679,900  |   |                       |   | 773,063 |   |   |   | 3.58 |   |   |   | 93,071,569 |   |   |   | 792,600 |   |   |   | 3.38 |   |
| Subordinated debt            |   |                       | 10,310,000  |   |                       |   | 160,761 |   |   |   | 6.19 |   |   |   | 10,310,000 |   |   |   | 161,509 |   |   |   | 6.22 |   |
| Total interest bearing       |   |                       |        |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| liabilities                  |   |                       | 413,640,024 |   |                       |   | 2,370,117 |   |   |   | 2.27 |   |   |   | 417,319,165 |   |   |   | 2,644,885 |   |   |   | 2.51 |   |
| Non-interest bearing         |   |                       |        |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| liabilities                  |   |                       | 37,490,779  |   |                       |   |   |   |   |   |   |   |   |   | 33,670,546 |   |   |   |   |   |   |   |   |   |
| Total liabilities            |   |                       | 451,130,803 |   |                       |   | 2,370,117 |   |   |   | 2.08 |   |   |   | 450,989,711 |   |   |   | 2,644,885 |   |   |   | 2.33 |   |
| Equity                       |   |                       | 47,879,187  |   |                       |   |   |   |   |   |   |   |   |   | 56,672,470 |   |   |   |   |   |   |   |   |   |
| Total liabilities            |   | $                          | 499,009,990 |   |                       |   |   |   |   |   |   |   |   | $ | 507,662,181 |   |   |   |   |   |   |   |   |   |
| and equity                   |   |                       |        |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest                 |   |                       |        |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| income/margin (5)            |   |                       |        |   |                       | $      | 2,953,891 |   |   |   | 2.77 | % |   |   |   |   |   | $ | 3,513,169 |   |   |   | 3.25 | % |
| Net interest spread (6)      |   |                       |        |   |                       |   |   |   |   |   | 2.72 | % |   |   |   |   |   |   |   |   |   |   | 3.18 | % |
|                         |   |                       |        |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| (1)   | Annualized |
|-----------------|------------|

| (2)   | Tax equivalent yields for nontaxable investments assuming a 36% tax rate. |
|-----------------|---------------------------------------------------------------------------|

| (3)   | Does not include nonaccruing loans. |
|-----------------|-------------------------------------|

| (4)   | Income includes loan fees of $189,740 in 2010 and $144,510 in 2009. |
|-----------------|---------------------------------------------------------------------|

| (5)   | Net interest income divided by total earning assets. |
|-----------------|------------------------------------------------------|

| (6)   | Total interest earning assets yield less interest bearing liabilities rate. |
|-----------------|-----------------------------------------------------------------------------|

----

|                                     |   | Analysis of Changes in Net Interest Income           |       |
|------------------------------------------|--------|------------------------------------------------------|------------|
|                                     |   | For the nine months ended September 30, 2010         |       |
|                                     |   | Versus nine months ended September 30, 2009 (1) |       |
|                                     |   | Volume                                               |       |   | Rate |   |   | Net Change |   |
| Interest income:                         |   |                                                 |       |   |   |   |   |   |   |
|                                     |   |                                                 |       |   |   |   |   |   |   |
| Cash and Federal funds sold              |   | $                                                    | 12,079     |   |   | $ | 20,734 |   |   | $ | 32,813 |   |
| Investments - taxable                    |   |                                                 | 776,491    |   |   |   | (606,362 | ) |   |   | 170,129 |   |
| Investments - non taxable (2)            |   |                                                 | (361,749   | ) |   |   | (4,569 | ) |   |   | (366,318 | ) |
| Total investments and federal funds sold |   |                                                 | 426,821    |   |   |   | (590,197 | ) |   |   | (163,376 | ) |
| Net loans (3)                            |   |                                                 | (2,419,600 | ) |   |   | (630,455 | ) |   |   | (3,050,055 | ) |
| Total interest income                    |   |                                                 | (1,992,779 | ) |   |   | (1,220,652 | ) |   |   | (3,213,431 | ) |
| Interest expense:                        |   |                                                 |       |   |   |   |   |   |   |   |   |   |
| Savings and transaction accounts         |   |                                                 | 165,583    |   |   |   | 116,504 |   |   |   | 282,087 |   |
| Time deposits                            |   |                                                 | (376,961   | ) |   |   | (1,668,991 | ) |   |   | (2,045,952 | ) |
| Other borrowings                         |   |                                                 | (151,902   | ) |   |   | 93,196 |   |   |   | (58,706 | ) |
| Subordinated debt                        |   |                                                 |  -    |   |   |   | (1,202 | ) |   |   | (1,202 | ) |
| Total interest expense                   |   |                                                 | (363,280   | ) |   |   | (1,460,493 | ) |   |   | (1,823,773 | ) |
| Net interest income                      |   | $                                                    | (1,629,499 | ) |   | $ | 239,841 |   |   | $ | (1,389,658 | ) |

| (1)   | Changes in rate/volume have been allocated on a consistent basis to rate. |
|-----------------|---------------------------------------------------------------------------|

| (2)   | Tax equivalent yields for nontaxable investments assuming a 36% tax rate. |
|-----------------|---------------------------------------------------------------------------|

| (3)   | Income includes loan fees of $414,861 in 2010 and $500,686 in 2009. |
|-----------------|---------------------------------------------------------------------|

----

|                                     |   | Analysis of Changes in Net Interest Income            |     |
|------------------------------------------|--------|-------------------------------------------------------|----------|
|                                     |   | For the three months ended September 30, 2010         |     |
|                                     |   | Versus three months ended September 30, 2009 (1) |     |
|                                     |   | Volume                                                |     |   | Rate |   |   | Net Change |   |
| Interest income:                         |   |                                                  |     |   |   |   |   |   |   |
|                                     |   |                                                  |     |   |   |   |   |   |   |
| Cash and Federal funds sold              |   | $                                                     | 7,366    |   |   | $ | 8,070 |   |   | $ | 15,436 |   |
| Investments - taxable                    |   |                                                  | 216,997  |   |   |   | (215,612 | ) |   |   | 1,385 |   |
| Investments - non taxable (2)            |   |                                                  | (36,947  | ) |   |   | (9,684 | ) |   |   | (46,631 | ) |
| Total investments and federal funds sold |   |                                                  | 187,416  |   |   |   | (217,226 | ) |   |   | (29,810 | ) |
| Net loans (3)                            |   |                                                  | (702,577 | ) |   |   | (101,659 | ) |   |   | (804,236 | ) |
| Total interest income                    |   |                                                  | (515,161 | ) |   |   | (318,885 | ) |   |   | (834,046 | ) |
| Interest expense:                        |   |                                                  |     |   |   |   |   |   |   |   |   |   |
| Savings and transaction accounts         |   |                                                  | 43,852   |   |   |   | (15,996 | ) |   |   | 27,856 |   |
| Time deposits                            |   |                                                  | (44,202  | ) |   |   | (238,137 | ) |   |   | (282,339 | ) |
| Other borrowings                         |   |                                                  | (62,948  | ) |   |   | 43,411 |   |   |   | (19,537 | ) |
| Subordinated debt                        |   |                                                  |  -  |   |   |   | (748 | ) |   |   | (748 | ) |
| Total interest expense                   |   |                                                  | (63,298  | ) |   |   | (211,470 | ) |   |   | (274,768 | ) |
| Net interest income                      |   | $                                                     | (451,863 | ) |   | $ | (107,415 | ) |   | $ | (559,278 | ) |

| (1)   | Changes in rate/volume have been allocated on a consistent basis to rate. |
|-----------------|---------------------------------------------------------------------------|

| (2)   | Tax equivalent yields for nontaxable investments assuming a 36% tax rate. |
|-----------------|---------------------------------------------------------------------------|

| (3)   | Income includes loan fees of $189,740 in 2010 and $144,510 in 2009. |
|-----------------|---------------------------------------------------------------------|

----

----

| Balance at December 31, 2009                                                                        |   | $      | 10,042 |   |
|-----------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
| Current Year Loan Loss Provision                                                                    |   |   | 2,125  |   |
| Charge- offs:                                                                                       |   |   |   |   |
| Construction and land development                                                                   |   |   | 1,913  |   |
| 1-4 family residential                                                                              |   |   | 472    |   |
| Multifamily                                                                                         |   |   | 35     |   |
|            Nonfarm, nonresidential           |   |   | 92     |   |
| Commercial and industrial                                                                           |   |   | 63     |   |
| Installment loans to individuals                                                                    |   |   | 128    |   |
| Recoveries:                                                                                         |   |   |   |   |
|            Construction and land development |   |   | 5      |   |
| 1-4 family residential                                                                              |   |   | 21     |   |
| Nonfarm, nonresidential                                                                             |   |   | 256    |   |
| Commercial and industrial                                                                           |   |   | 19     |   |
| Installment loans to individuals                                                                    |   |   | 4      |   |
| Balance at September 30, 2010                                                                       |   | $      | 9,769  |   |

|                              |   | Period Ended September 30, 2010 |   |
|-----------------------------------|--------|---------------------------------|--------|
|                              |   | General Reserve                 |   |   | Specific Reserve |   |   | Total |   |
|                              |   | (Dollars in thousands)          |   |
| Construction and Land Development |   | $                               | 2,256  |   |   | $ | 323 |   |   | $ | 2,579 |   |
| Farmland                          |   |                            | 2      |   |   |   | - |   |   |   | 2 |   |
| 1-4 Family Residential            |   |                            | 1,878  |   |   |   | 155 |   |   |   | 2,033 |   |
| Multi-Family Residential          |   |                            | 97     |   |   |   | 82 |   |   |   | 179 |   |
| Commercial Real Estate            |   |                            | 747    |   |   |   | 1,652 |   |   |   | 2,399 |   |
| Commercial and Industrial         |   |                            | 608    |   |   |   | - |   |   |   | 608 |   |
| Consumer and Other                |   |                            | 181    |   |   |   | - |   |   |   | 181 |   |
| Other General Reserves            |   |                            | 1,186  |   |   |   | - |   |   |   | 1,186 |   |
| Unallocated                       |   |                            | 602    |   |   |   |   - |   |   |   |  602 |   |
| Total Allowance                   |   | $                               | 7,557  |   |   | $ | 2,212 |   |   | $ | 9,769 |   |

----

----

| Maturity       |   | Rate   |   |   | Balance |   |
|----------------|--------|--------|--------|--------|---------|--------|
| November 2010  |   |   | 3.24   | %      |    | $      | 3,000,000 |   |
| February 2011  |   |   | 0.29   | %      |    |   | 4,500,000 |   |
| March 2011     |   |   | 2.96   | %      |    |   | 7,500,000 |   |
| September 2013 |   |   | 4.75   | %      |    |   | 10,000,000 |   |
| June 2014      |   |   | 3.92   | %      |    |   | 2,000,000 |   |
| October 2016   |   |   | 4.25   | %      |    |   | 5,000,000 |   |
| November 2016  |   |   | 4.08   | %      |    |   | 5,000,000 |   |
| January 2017   |   |   | 4.35   | %      |    |   | 5,000,000 |   |
| January 2017   |   |   | 4.40   | %      |    |   | 5,000,000 |   |
| January 2017   |   |   | 4.46   | %      |    |   | 5,000,000 |   |
| January 2017   |   |   | 4.60   | %      |    |   | 5,000,000 |   |
| March 2018     |   |   | 2.33   | %      |    |   | 5,000,000 |   |
| April 2018     |   |   | 3.03   | %      |    |   | 5,000,000 |   |
|           |   |   |   |   |    |   |   |   |
| Balance        |   |   |   |   |    | $      | 67,000,000 |   |

----

|                                     |   | Capital Ratios |   |
|------------------------------------------|--------|----------------|--------|
|                                     |   |           |   |   | Well Capitalized |   |   | Adequately Capitalized |   |
|                                     |   | Actual         |   |   | Requirement |   |   | Requirement |   |
| (Dollars in thousands)                   |   | Amount         |   |   | Ratio |   |   | Amount |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
| The Bank                                 |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total capital (to risk-weighted assets)  |   |           | 54,596 |   |   |   | 15.89 | % |   |   | 34,348 |   |   |   | 10.00 | % |   |   | 27,479 |   |   |   | 8.00 | % |
| Tier 1 capital (to risk-weighted assets) |   |           | 50,212 |   |   |   | 14.62 | % |   |   | 20,609 |   |   |   | 6.00 | % |   |   | 13,739 |   |   |   | 4.00 | % |
| Tier 1 capital (to average assets)       |   |           | 50,212 |   |   |   | 10.38 | % |   |   | 24,192 |   |   |   | 5.00 | % |   |   | 19,353 |   |   |   | 4.00 | % |
| The Company                              |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total capital (to risk-weighted assets)  |   |           | 61,294 |   |   |   | 17.59 | % |   |   | N/A |   |   |   | N/A |   |   |   | 27,876 |   |   |   | 8.00 | % |
| Tier 1 capital (to risk-weighted assets) |   |           | 56,849 |   |   |   | 16.32 | % |   |   | N/A |   |   |   | N/A |   |   |   | 13,938 |   |   |   | 4.00 | % |
| Tier 1 capital (to average assets)       |   |           | 56,849 |   |   |   | 11.45 | % |   |   | N/A |   |   |   | N/A |   |   |   | 19,858 |   |   |   | 4.00 | % |

|                                |   |  Within OneMonth |      |   | After OneThroughThreeMonths |   |      | After ThreeThroughTwelveMonths |   |   |  Within OneYear |   |   | GreaterThanOne Year |       |   |   Total |   |
|-------------------------------------|--------|-----------------------|-----------|--------|-----------------------------|--------|-----------|--------------------------------|--------|--------|----------------------|--------|--------|---------------------|------------|--------|-------------------|--------|
| Unused commitments to extend credit |   | $                     | 3,036,025 |   |                        | $      | 2,568,932 |                           |   | $      | 6,618,506            |   |   | $                   | 12,223,463 |   |              | $      | 9,926,682 |   |   | $ | 22,150,145 |   |
| Standby letters of credit           |   |                  | 307,159   |   |                        |   | 57,880    |                           |   |   | 274,960              |   |   |                | 639,999    |   |              |   |  - |   |   |   | 639,999 |   |
| Totals                              |   | $                     | 3,343,184 |   |                        | $      | 2,626,812 |                           |   | $      | 6,893,466            |   |   | $                   | 12,863,462 |   |              | $      | 9,926,682 |   |   | $ | 22,790,144 |   |
|                                |   |                  |      |   |                        |   |      |                           |   |   |                 |   |   |                |       |   |              |   |   |   |   |   |   |   |

----

----

|   |   Date of Sale | Number of Shares |    |   | Aggregate Purchase Price |   |
|--------|---------------------|------------------|---------|--------|--------------------------|--------|
|   | 08/26/10            |             | 48,472  |   |                     | $      | 134,996 |   |
|   | 08/30/10            |             | 8,706   |   |                     |   | 25,248 |   |
|   | 09/08/10            |             | 100,000 |   |                     |   | 285,000 |   |
|   | 09/09/10            |             | 3,637   |   |                     |   | 10,002 |   |
|   | 09/16/10            |             | 10,000  |   |                     |   | 27,500 |   |

| Date:           November 15, 2010 | By:    |   s/L. Wayne Pearson |
|------------------------------------------------------------------------------------------|--------|---------------------------|
|                                                                                     |   | L. Wayne Pearson          |
|                                                                                     |   | Chief Executive Officer   |

| Date:           November 15, 2010 | By:    |   s/William C. Heslop |
|------------------------------------------------------------------------------------------|--------|----------------------------|
|                                                                                     |   | William C. Heslop          |
|                                                                                     |   | Chief Financial Officer    |

----

| 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|------|-----------------------------------------------------------------------------------------------------|

| 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|------|-----------------------------------------------------------------------------------------------------|

| 32 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  This exhibit is not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 but is instead furnished as provided by applicable rules of the Securities and Exchange Commission. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----